They lost many experienced thalmor warriors/wizards, and a highly prized general. Battlemages and wizards aren't all that easy to replace.
You're right, that was an overstatement. However, they appear to have lost fewer troops than did the empire, which lost significantly more than half its total armed forces. (every legion at < 1/2 strength, some legions destroyed).
As for the ease of wizard replacement... I'd tend to differ with you on that. Admittedly, we don't have fantastic sources for this stuff, but the general impression one gets of Alinor is that it's a land filled to the brim with wizards and potential wizards, and when it comes to training them, again, we don't have fantastic sources (AFAIK), but Tamriel seems to generally treat low-magic (fireballs and whatnot) as a skill like any other. You don't need to meditate on a mountaintop with a mystic mentor for twenty years (that's only for the crazy stuff), you just need a teacher. The Thalmor reliance on specialized wizard troops (which, AFAIK, is just something we're all assuming they do) probably shouldn't make it that much harder for them to re-man their armies.
And yes it was a majority of their forces. The hammerfell one was intended to be the location of most of their forces until their successes in Cyrodiil happened.
"In 4E 174, the Thalmor leadership committed all available forces to the campaign in Cyrodiil, gambling on a decisive victory to end the war once and for all."
You're right. I had forgotten about that, but that still doesn't mean they lost the majority of their forces. The only city that was taken from them was the IC. They were also occupying Braviil and Leyawiin, and most likely were preforming some operations in the hinterland. You're right that the majority of their invasion forces were in Cyrodiil, but only a portion of those were in the IC, and only those forces actually stationed in the IC were killed.
So, the majority of the majority of their invasion forces were killed (>1/4 total invasion forces), they certainly suffered some notable losses at the broken sieges of Hammerfel, and of course must of sustained normal loses as part of their standard operations throughout the war (nothing is accomplished in war without some loss of life). It's harder to put a figure on the total portion of the Dominion forces lost (compared with doing the same for the Empire), but I'd be willing to say that anywhere from 1/3 to 5/12 of their invasion forces seems reasonable. It should also be noted that the Dominion must have had a home guard, especially considering their apparent militaristic governing style, though I imagine this was definitely less than half of their total forces, and perhaps as low as 1/8, though these figures are based on absolutely nothing, as I've never really studied the details of any non-legendary sword & shield era military campaign, and how much defense was allowed for during an offensive.
It really seems like the Thalmor are doing the same tactic they pulled in Rising Threat. They don't really have the forces for what they want to do so they appear intimidating and strike in such force that they seem more powerful than they are. I'd say the Legion is a lot better off than they seem to think. The thalmor are screwing with them like they always have.
What gives you that impression?
There's that, but also because the Legion winning is a better story.
Oh, I guess I had forgotten to mention this aspect of my take on the situation: I think humanity is certain to prevail, or, at least, the Thalmor are destined to falter. The games really can't continue to get made if the Thalmor achieves all its goals, so the Thalmor really can't win. Plus, they're clearly set up as the villains of the story, and, well, villains tend to lose. Similarly, another argument for why the Dominion is stronger might be that villains always start the story more powerful than the heroes. In New Hope and Empire Strikes Back, Darth Vader and the Empire are clearly more powerful than Luke and the Rebel Alliance. It's only at the very end that the good guys become powerful enough to stand up to the enemy. Otherwise, it makes for a damned boring story.